Mercari plans investment blitz to crack code in U.S. marketplace

Nikkei -- Jan 17
As Japan's Mercari pursues its ambition to become a global online marketplace, it must first turn around flagging operations in the U.S., where players big and small are waging a cutthroat competition.

Mindful of the company's U.S. conundrum, CEO Shintaro Yamada pledged to step up investment in a blog post published early in the new year.

"There are plenty of opportunities including overseas development, so I want to spend big both defensively and offensively, to maximize not short-term profit, but medium- and long-term future profit," Yamada wrote.

The scale of Mercari's U.S. operations has gradually expanded since its 2014 launch, but the company now looks to step on the gas, something it can afford to do because it is now turning a steady profit at home.

Mercari's parent-only earnings, which cover just the Japanese secondhand market business -- its U.S. operations and Merpay cashless payments system are handled by subsidiaries -- have been rising steadily, offsetting losses elsewhere. Operating profit came to 15.6 billion yen ($136 million) for the year through June, 3.5 times the result four years earlier.

Things have not gone so smoothly in the U.S. Mercari set a goal in August of 20% annual growth in gross merchandise volume there. Shortly thereafter, results for the third quarter of 2021 showed a 6% year-on-year decline.

The company had logged a 72% jump in U.S. GMV to $1.17 billion for the preceding fiscal year. It chalked up the drop-off for that quarter to "the high hurdle of the previous year," which saw a jump in demand from consumers stuck at home amid the pandemic.